Fed's Collins Sees Rate Cuts ‘Soon’ If Inflation Keeps Falling

(Bloomberg) — The US Federal Reserve could soon begin easing interest rates if inflation continues on its downward path amid a strong labor market, Boston Fed President Susan Collins said in an interview with the Providence Journal.

“If the data continue the way that I expect, I do believe that it will be appropriate soon to begin adjusting policy and easing how restrictive the policy is,” Collins said. “My outlook is for continued gradual reduction back to our 2% target amid a healthy labor market.”

The central bank’s rate-setting panel next meets Sept. 17-18 in Washington.

The US labor market remains strong even though the latest jobs figures came in softer than predicted, Collins added. The July jobs report showed hiring slowed markedly and the unemployment rate rose to 4.3%, its highest level in nearly three years.

Collins said she expects interest rates to be lower in the next few years, though she declined to be more precise on her outlook for the timing and pace of easing.

Collins also said:

(Updates with jobs report details in fourth paragraph.)